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male speaker: ladies andgentlemen good afternoon. please welcome chairman andchief executive officer of google, dr. eric schmitt. eric schmidt: well goodafternoon and welcome to google's 2008 annual meetingof shareholders. we're delighted tohave you here. first place, did you allenjoy your lunch? ok, very important at google. i'm eric, properly introduced.
i hope everybody here has hada chance to get registered. if you've not been registeredfor the meeting find somebody in the corner who will makesure you get properly registered. and we gave you an agenda, whichhe should have. and a set of rules of conduct and soforth-- the usual stuff-- that you find in shareholdermeetings. so at this time i'd like tocall the meeting to order. before doing anything else,i want to make sure that i
introduce some of ourdirectors and officers that are here. let's see-- we havepaul otellini. you want to raise your hand. john hennessy, ram shriram, annmather, and john doerr. did i miss any of theboard members, aside from larry and sergey? larry stand up. this is larry page.
i think people know larry. and larry's doing his bestimpersonation of sergey who will be here in just a minute. sergey you just showed up. there's sergey. and before i say anything else,the greatest highlight of my personal and professionallife, i think, is the collaboration thati have with these two extraordinary people.
so it's great to be herewith my colleagues. we have a number of executives, from google as well. i see george reyes, cfo. i see elliot schrage. i saw jonathan rosenberg. david drummond of coursein just a sec. anybody else, shout out. we also have debra kelley,representative of
computershare, who will act asour inspector of elections. and dave cabral, arepresentative of ernst & young, our auditors of course,who are independent accountants. i'd also now like to introducedavid drummond, who as i mentioned before, he's here,and he's the chief legal officer and corporatesecretary. david of course is goingto do the formal business of the meeting.
and you all remember having donethis before, we're going to do the formal businessmeeting, as soon we get that over then we're going togo right into a short presentation from me. and then q&a and comments thatthey may have on this or any other subjects. please don't break thepodium here david. you're all set? go ahead.
david drummond: i'm all set. thank you eric. and thanks everyone for comingand let me give you my welcome to the meeting as well. we'll try to be quickwith the actual we've got a q&a session lateron that i'm sure you're eager to get to. a quick note about stockholderquestions, as stated in the rules of conduct, stockholdersshould not address the meeting
until you're actually recognizedfrom the podium. we'll have, as i said, we'llhave a question and answer period later on so you can askquestions, that will be following eric's presentation. now if you want to ask aquestion during the q&a period, a please move to oneof the microphones that we have, i think we have two,one on each aisle, on each side of the room. and after we recognize you,please identify yourself and
your status as eithera shareholder or a representative of a shareholderand then go ahead and ask your question. so thanks in advance forcooperating with these rules. now on to the formal business. i've received the affidavit ofmailing of computershare, which states that the noticeof meeting and the accompanying proxy materials andannual report were mailed to the shareholderson march 11th.
that's all the shareholdersof record as of that date. in addition, i've been advisedby the inspector of elections that the holders of ouroutstanding class a and class b common stock, representingat least a majority of the voting power of our outstandingcapital stock that's entitled to vote, isrepresented today, either in person or by proxy. so as a result, we have aquorum, the meeting is duly constituted and we can proceedwith the actual business.
first item, is the electionof directors. ten directors will be electedat today's meeting. the directors today will holdoffice until next year's annual meeting of shareholdersor until their successors are duly elected and qualified. board of directors has nominatedthe following persons, eric schmitt, sergeybrin, larry page, john doerr, john hennessy, art levinson, annmather, paul otellini, ram shriram, and shirley tilghman.
our bylaws require that astockholder provide advance notice of any intent to nominateanyone as a director. we haven't received any suchnotice, so accordingly, i declare that the nominationsfor director are closed. the next matter being submittedto our stockholders is the ratification of theappointment of ernst & young as our independent auditorsand registered public accounting firm. our board of directors hasrecommended that our
stockholders ratify theappointment of ernst & young. for the fiscal year, endingdecember 31, 2008. the third item of business beingsubmitted today, is to approve an amendment to our 2004stock plan to increase the number of shares of class acommon stock under the plan by an additional numberof 6,500,000 shares. and our board of directors hasalso recommended that our stockholders vote in favor ofthis amendment to the plan. now the next two itemson the agenda
are stockholder proposals. our board of directors hasunanimously recommended that our shareholders vote againstthese proposals. however, one of our founders,sergey brin, who's also a director of the company, willbe abstaining and not voting against these proposals in hiscapacity as a stockholder. now the first stockholderproposal is being brought by the office of the comptrollerof new york city and st. scholastica monastery.
i'd like to introducemr. tony cruise. mr. cruise are you here? great, welcome to google. and mr. cruise will bepresenting this proposal. you have a total of threeminutes to make a statement in support of the proposal today. tony cruise: great, thank you. again my name is tony cruise. and i'm here today using aproxy of the office of
comptroller of new york city,which holds about $200,000,000 worth of google stock. and i'm also here representingamnesty international, the largest human rightsorganization in the world, with more than 2,000,000members worldwide. so i'm here to request yoursupport for a proposal on internet censorship. concerns about google'sparticipation in the chinese government's restriction offreedom of information on-line
has been well documented. including in the amnestyinternational report undermining freedom ofexpression in china. as shareholders may be aware,google is currently participating in amulti-stakeholder initiative to develop a set of voluntaryprinciples which would guide how companies like googlerespond to censorship demands in countries like china. amnesty international has beenparticipating in this
initiative in an effort toensure the outcomes reflect a sincere commitment to upholdingthe highest attainable standard of corporateresponsibility for human rights. specifically we feel stronglythat for the msi to be meaningful, it must include thefollowing: a commitment to independent monitoring andassessment of the company's fulfillment of the principlesthat are agreed to, a public commitment to honoring freedomof expression, transparency
about filtering process usedto limit or restrict search results, including informingusers, development of human rights impact assessments thatwould be disclosed publicly, a commitment to exhaust allpossible remedies and appeals before complying with statedirectives that would violate internationally recognized humanrights, including the rights to free expression,access to information, and privacy, and documentation andpublic disclosure of all cases where legally binding censorshiprequests have been
compiled with. our requests are echoed by theproposal before you for a vote today which requests thatmanagement institute policies to help protect freedom ofexpression on the internet. the proposal additionallyrequests that data that can identify individual usersshould not be hosted in internet restricting countrieswhere political speech can be treated as a crime by the legalsystem and that users should be informed about thecompany's data retention
practices, and the ways whichtheir data is shared with third parties. such policies and standards donot currently exist at google, and while we hope that themulti-stakeholder process will result in such policies andpractices, we've seen little more than talk and defensivenessfrom google since these problemsfirst emerged. while a willingness to engagengos and other experts on these issues as a usefulfirst step.
the truth is that 18 monthslater, the issue of internet censorship in countries likechina has worsened and we still haven't seen concretechanges from google. there is nothing inthe charter of the multi-stakeholder process whichprecludes google from taking proactive steps thatmight ameliorate the situation while conversations about thestandardized principles go on. therefore, on behalf of thecomptroller of new york and amnesty international, i askshareholders to vote in favor
of this proposal as a strongsignal to google that expedited action on theseissues is required. thank you. david drummond: thankyou mr. cruise. sir, gentleman on my right, doyou have a statement that addresses the proposalat hand. male speaker: yes. david drummond: pleaseidentify yourself. male speaker: my nameis [unintelligible].
i have a smaller shareof google. at first, i want thank google,perform better than yahoo, to help china [unintelligible] to censorship. actually today we read the wallstreet journal, other chinese writer got arrested. and i myself, is a politicalrefugee, i couldn't go back to china for more than10 or 20 years. so what i want to say is i fullysupport the proposal and
i want the boarding especiallywhen you make policy regarding the censorship especially paymore attention on china. because now china, we're a lotinternet user country. thank you very much. david drummond: thank you verymuch for your comment. the gentleman onthe other side. you have a comment addressingthe proposal? shelton ehrlich: yes i do. david drummond: ok, pleaseidentify yourself.
shelton ehrlich: my name isshelton ehrlich, i own 23 shares of google. david drummond: thank you. shelton ehrlich: i used googleon my computer to search amnesty international and thecomptroller of the city of new york, and the board of trusteesof the pension plan that made this proposal. i have nothing to say on themerits of the proposal itself. i just want the shareholders toknow that the comptroller
of the city of new yorkis a politician. he has two campaignsgoing on today. one is condemning ajury verdict in the city of new york. it's as if our cfo got involvedin felony cases in mountain view. the second thing he has goingfor him to maybe rise to mayor or governor is a campaign tocome to shareholder meetings and criticize decent, wonderful,corporations.
it's on his web site,that's his job. i have another comment onamnesty international. today is the 60th birthdayof the nation of israel. amnesty international is one ofthe leaders attempting to stop israel from defendingitself against terrorists. david drummond: thank youvery much sir for your participation. now it's time to move to thesecond stockholder proposal that's being brought tothe meeting today.
this one is being brought byharrington investments inc. and i'd like to introduce mrjohn harrington who is a representative from harringtoninvestments to present the proposal. mr harrington you'vegot three minutes. john harrington: thank youmr. chairman, members. i am not a politicianso you're all safe in your seat today. i'm not advocating anything buthuman rights in china and
nothing but a modest proposalto allow the google board to adopt and amend their bylaws,their laws of the corporation, to create a committeeon human rights. what we're doing is, we arelooking for a constructive way to deal with human rightsissues across the globe. not only in china, but invietnam, and saudi arabia, in a lot of countries that restrictthe internet and censor the internet. management of this companyunfortunately has shown itself
to be unwilling or unable tograsp the gravity of the issue of human rights in china andtake appropriate steps. this world must begin toexercise its fiduciary duty. the directors of google, andthis is directed at the directors of google, notmanagement, because they have the fiduciary duty, and theyare elected by us. and i should say in retrospectwhat's really interesting is when you filled out your ballottoday you had two choices, you can either voteyes, or you could withhold
your proxy. did you know this companydoesn't even have majority voting. we can't nominate directors. we can only vote infavor or withhold. that means in a plurality votingwe can't vote against the directors. we have no say in the waythis company is run. and there's a lot ofsimilarities actually between
the chinese communist partyand the board of google unfortunately. no, i'm seriously, we need tothink about this relative to majority rule. so we have seen the failure of,time and time again, of our board of directors toarticulate and demonstrate morally defensible human rightspolicies and this can result in significant costto the shareholders. our company has come underheavy criticism for
restricting internet contentthat the chinese government deems subversive,that is freedom of speech and assembly. guaranteed, by the way, bythe chinese constitution. which this company unfortunatelyhas not challenged in chinese courts orat the international court of justice. this is censorship and is aviolation of human rights and today's internet consumersreally actually don't like
patronizing companies thatviolate human rights. blatant inhibitions of freeflow of information are commonplace in the people'srepublic of china. which i might remind all of usis a totalitarian regime that tortures its own citizens. google's self censoringtechnology is an important part of that policy. google's refusal to disclose thesearch results it filters, or to legally challenge thechinese government on
violations of its ownconstitution, only furthers the abuses there. google, along with other leadingus technology firms, have helped build the greatfirewall of china. a chinese government initiativethat restricts and monitors the flow of informationbeing transmitted over the internetwithin china. google's influential internetpresence makes its client policy particularlysignificant.
china is a totalitarian,terrorist government. third only in its repressivepolicies after nazi germany and the apartheid systemof south africa. we need more than the moralityof materialistic self interest to lead us into the21st century. i asked the board of directorsto begin to exercise serious fiduciary duty on beginning todeal with the very modest proposal that will allow themto deal with it, as board members and fiduciary.
in creating a board committeeon human rights. david drummond: thankyou mr. harrington. sir, do you have another commentwith respect to the proposal-- this proposal? male speaker: yes i say-- david drummond: okplease go ahead. i'm a shareholder ofgoogle company. i fully support the proposal. i want to--
[unintelligible] one fact to that. when yahoo or some other companysays this is not the company's business, it'sgovernment business that is totally wrong. because in my experience i wasexpelled from china, and expelled from japan. now the fbi want to expelme from america. so the government can neverdo anything good for that
worldwide citizenship. so i want to get support andlet the shareholder meeting know government willnot help us. so i really need the corporationto take that responsibility. and certainly i can see,we can help google. i'm a president of a us, japan,and china comparative policy research institute anda humanitarian in china. so we have made connectionwith china and
[unintelligible]. i talked with many victims fromchina and they asked me to be presented them in thismeeting to tell google management and the shareholdersto think about doing business when doingthings in china. definitely where we need torespect human rights, like in this proposal, that'smy point. david drummond: thank you sir. sir.
shelton ehrlich: yes, my nameis shelton ehrlich. i still own 23 sharesof google. [laughing] i think i remember themotto of google. don't be evil, or isit don't do evil. david drummond: don't be evil. shelton ehrlich:don't be evil. well i looked up harringtoninvestments using google, and harrington investments iswhat's called a socially
responsible fund. they refused to investin people who manufacture weapons. that includes one ofour big companies nearby, lockheed martin. it includes ibm, that makescomputers from the military. one of their other issuesis electricity from nuclear power. now if we as a nation wantto reduce greenhouse gas
emissions from coal oil, and gasfired power plants, we are going to need nuclear power. harrington investmentsrefuses to do that. now regarding the proposalitself, one second, if silicon valley companies were not todo business in china i wouldn't have my macintoshcomputer, i wouldn't have my nike shoes, i wouldn't have alot of things, so who is not to be censured alone for beingin business in china. david drummond: thankyou very much.
so that ends the discussionover the proposals and the various items on theagenda today. so because there are no furtheritems scheduled to come before the stockholdersthe polls are now open. now if you previously voted byproxy you don't need vote today unless you wish toactually change your vote. now let me just note that we'vereceived sufficient proxies in advance of themeeting to know that the proposals we discussed todaywill pass or fail in
accordance with therecommendations of the board of directors that we've madein a proxy statement. but we want to make surethat everyone votes. so please if you picked up yourballot when you register today, we have some folks whocan come collect that. so we're going to pause for amoment in order for anyone to submit a ballot that they'veused to vote. and when you do that pleasemake sure that you hand in your legal proxies thatare part of that
ballot if you have one. ok, it looks like we'vecollected most of the ballots so i now declare the polls foreach matter that's voted upon at this meeting closed anddirect the inspectors of elections to collectthe ballots-- i guess i've alreadydone that. so the results. i've been advised by theinspector of elections that the nominees for the election tothe board of directors have
been duly elected. i've been further advised thata majority of the shares present at the meeting, inperson or by proxy, have voted in favor of the appointment ofernst & young to act as our independent registered publicaccounting firm for the fiscal year ended december 31, 2008. and they have voted in favor ofthe amendment to our 2004 stock plan that i previouslydescribed. so each of these proposalshas been approved.
i've also been advised by theinspector that a majority of the shares present at themeeting, in person or by proxy, voted against first thestockholder proposal regarding internet censorship and secondthe stockholder proposal regarding the creationof a board committee on human rights. so each of those proposals hasnot been approved by the shareholders today. so that ends the officialportion of the meeting and i
hereby declare the formalmeeting adjourned. eric will now make apresentation to you about google's business andwe'll have a q&a following that, eric. eric schmidt: thank you david,and very well done. i want to give you all a briefupdate on the company and the easiest way to summarize thecompany's is i think things are going well. and it's a good message.
the mission as set by larry andsergey when they founded the company has not changed. what has changed is the scaleof what we're doing. so this simple idea, bornliterally in the dorm room and in the garage and all the thingsthat made google is today, has served as a basisof how we run the company. it's really about broad goals,broad initiatives, that change the world. that really affect many,many people.
and we have as a platform, theinternet which of course has more than 1.3 billion users. and is growing at a couplehundred million a year the average american internet useris spending 13% more time on the internet this yearthan last year. so either productivity is goingup, or down, depending on your view but is definitelychanging and we obviously benefit from that. people have a lot saywhich is great.
70,000,000 blogs exists. 120,000 more createdevery day. this is phenomenal. new expression, new voices,people we haven't heard from before, whether welike them or not. looks like more than half of thenew blogs are created by users who are 18 yearsold or lower. so again it's generationalas well. the number of photographs--
an alarming statistic from myperspective is that more than 10 hours of youtubevideo is uploaded every minute into youtube. so i hope you all are spendinglots of time on youtube. an even more interestingstatistic, is if you if you plot out moore's law, it wouldbe possible to have an ipod like advice that you click tothe equivalent of your belt, or in your purse, in some numberof years, maybe 5 or 10 years, which will have 85years worth of video.
so you'll be dead before youcan watch all the video on this device. so it's an amazing new world andit's just phenomenal and of course google is wellposition on this. now the business of course-- i don't need to go into this,you've all seen our results-- business is working well. the majority of our revenues, ofcourse, are in advertising. the last quarter we saw a shiftfrom us as the majority
to international fora majority which we think it's great. very much a global business. of course earnings, and cashflow, and operating profit, track with that and it's agreat business to be in. when you see google and yousee this very simple user interface, which sergeyliterally designed right, himself. we've changed a littlebit since then.
you sit there and thinkit looks so easy. but in fact what's beneath it,these acres of servers that we have built and own and power,which in my view are tremendous competitive damage tothe company, is very hard. we did more than 95 quality-- that is search quality--launches in the first quarter, over and over again. whether it's in a languageor for more information or so forth.
and we work on things likemaking our index bigger. so for example now, we you doa search, you search all of the indices. you literally searched throughevery piece of information, in case that relevant thing. if you went through all thosepages that google presents you, you will in factsee everything. of course, it will take youmany, many minutes to get through it.
we've also worked on performanceand relevancy. literally getting thingsto be more correct. and the eventual goal, if wecould do it, is to have exactly the right answer,and only have one. but of course with the explosionof information we may never get there. there may always bemultiple choices. so it's a race between all thatinformation coming in and our scientists and some of thebest brains in the plant to
literally figure out howto deal with all that information. that information explosion, toget you that very one or two or three right answers. and it's a daunting task at thescale that we operation in, with billions and billionsof pieces of information. with more coming, because werealso included personal information now, from your owninformation and so forth. so an example of this is that wehave changed google so that
we show not just the traditionaltext answers, but we now try to find the correctimages, web, audio, and so forth and video. so not only do we have to getthe words right, we've got to get the video right, and theaudio right, and so forth. coldplay is a band that i cantell you my daughters like, so here is all of the relevantinformation, the best video, the best music, the bestinformation about what they're up to.
we've also been workingon personalization. and so all of the sudden theseare much more personal. with a product called igoogle,we can actually deliver very, very specific things thatpeople care about. the primary business of thecompany's advertising. we love advertising. and we think advertising isvery, very helpful to people when it's informative andtargeted to them. we think advertising is not veryuseful when it's for a
product that you'renot going to use. it's not relevant to you, thatyou'll never buy, why waste the advertiser's moneyand your time, which is even more important. wouldn't it be better if weshowed you ads that were relevant to you. and you thought that they wereinteresting, or that you learned something, for youfigured out who the best suppliers are, and that'show we operate.
so we live in an ecosystem whereusers become publishers of information and then theywant to publish information, they can add our ads totheir content and make some money doing it. we have lots of stories ofpeople who were hobbyists in information and all of thesudden gave up some job which they viewed as boring in orderto become the world's expert on something that theycare a lot about. it's a wonderful story aboutinnovation, and information,
and empowerment aboutnew voices. and that model works, and worksnot just in the us it works everywhere. we just recently completedthe acquisition-- an incredibly importantacquisition, called doubleclick. roughly april 7th, westarted operating. and what it does is it allowsus to enter a much larger business that's near the textads business which i've been
talking about. it's called the displayads business. it's interesting that more than90% of our publishers have enabled display ads. so it looks like not just textads, but also display ads-- and display ads here doesn'tmean just little static pictures, it also means littlemovies, and little stories and little things thatare engaging. and we think that a whole newcategory of ads will emerge,
which are narrative. where it's involving the carand you're in the car and you're doing it and so forth. we think that advertisers willlike it and we think people will enjoy it. and remember the greatthing about our ads. if you don't like them you don'thave to click on them. so again you have some controlover the experience as well. we have ads formats,by the way, coming.
we have lots of things come outwith youtube for example. procter & gamble, as an example,ran five contest for gillette, tide, pepto-bismoland swiffer. break up with your mop and fallin love with stiffer. ok, i'm not in chargeof their ads. the ads worked really,really well. did a similar thing with gadgetads, where little gadget programs. andwe did one for example with honda civics.
where you could drive it aroundin the ad networks. really, really fun, reallyinteresting, to see if it works. so by doing this, wecan really give people a lot more control. the same thing is alsotrue in apps. we started a year ago, wechange our strategy from search and ads to search,ads and apps. because it was clear that we hadenough technology, we had
enough investment, enoughpeople, enough platforms, that we could begin to solve otherproblems that were nearby. the problem of who storesyour email. actually a pretty importantquestion for those of you live on email, as most of us do. what about instant messaging? how do we use geographicinformation and that sort of thing. this shift, to shift from pccentric to web centric
applications, is the definingtechnological shift of our generation. it's not going to be donein a year, it's the next 10, 20 years. google is particularly wellpositioned to take advantage of this shift. and indeed you can seecompetitors and so forth responding to the things thatwe're doing and actually trying to figure out how theycan participate in this too.
it's much bigger thanjust google. but we hope will happen, is thatpeople will move more of their information in whatwe call the cloud. and what that means is that youwalk in here, you forgot your computer, or yourmobile device. and you just see a computer likeone of those, and you can get everything over there, thatyou have at home, all your personal information, andagain secure, and nobody else gets access to it, andit just works.
it's really easy to understandwhen you state it that way. why have all these differentdevices and have something over here, and youforgot over here. why not just have everythingavailable to every device, very very, quickly, again withyour permission, with your passwords, in a verysecure way. that's the promise of thisapplications platform. and it's a very profoundtechnological change. so along the way we say whydon't we just entered this
business and let's figure outhow we can make some money. because it's good tomake money too. and so we built something calledapps for domain which is a simple way ifyour business-- that's why i wanted to talkabout this-- it's a simple way for business to dothe same thing. why should the business have-specially smaller businesses-- why should they have all thesetechnical people to try to keep all the computersrunning.
why don't they just have someonelike google do it. let the cloud do it, right, sothe business can get back to running the business. because they probably don'treally know that much about computers and they probablydon't like them that much. in any case it's not a gooduse of their time, even if they like them a lot. here is a list of interestinguniversities and companies which are beginning toadopt google apps.
we have more than 500,000businesses using this. that's a sense of thescale of this. eventually this will be a verylarge, and significant, source of revenue to our company. it's exciting to see itbeginning to take off, as the technology gets there, as thenetworks there, and so forth. same thing is true formobile devices. here you see a blackberry,you see a mobile phone, you see an iphone.
we have amazing resultswith all of these. access everywhere, 81% ofinternet users in japan access the web from theirmobile phones. even more disturbing frommy perspective. the three top books publishedin japan by circulation last year, were first publishedon mobile devices. and only after they were read onmobile devices, were turned into physical books. shows you how far aheadthey are of us in
this sort of model. and it's coming here too. american's send 1.6 billion textmessages a day, clearly lowering productivity. and the mobile highlightshere are phenomenal. the iphone has done very, verywell with the search traffic because again it has a fullbrowser, and there's other ones coming. and of course the youtube stuffis also doing well, and
you can see youtube onall these devices. have a similar story in maps. and i forgot to mention thefella on iphone his name is pegman, he's a googleemployee. he's been viewed more than10,000,000 times. he wears his little orangesuit runs around. and he's the mascot, if you cancall him that, for street view, showing you whereyou are on a street. and we actually use this, likewhere do i turn left, where do
i right, is at store stillthere, that kind of stuff. and you can do that with allthis interesting mapping technology. so we're moving to aplatform which is actually quite different. because here we are, we havethese static maps, got them from satellites, bought themfrom the government, that kind of stuff, why don't wenow have end users adding things to maps.
very, very interesting idea. we can combine userssubmissions, as well as the official stuff. and sometimes the users giveus better data than the government. no surprise, because thepeople live there. so all of a sudden now we have awhole phenomenon around what is called my maps. and submitting and changing andcorrecting the kinds of
things that you seeon our maps. and by the way we think it's funhere in mountain view, but imagine if you're in a city ina developing country where there is no accurate map. and there never has been one. and this is the only map you'regoing to ever use, which is obviously verygood for google. but all of a sudden it goes fromhumorous and exciting, to fundamental to how peopleconduct their lives in this
new internet world. so i'd like to offer to youthat a new part of our strategy is that the web isin fact itself a platform. we have more than 40 developerproducts an apis with a big developer conferencecoming up in a few weeks, up in san francisco. we launched a package calledgoogle gears, which you can plug in your browser. which allow you, for example,to get on an airplane and
still do your email. it fools it and says, heywe're still on a network connection even if we're not,and when you get off the airplane and get back on and onthe internet it reconnect and does the right things. we have a new mobile product,which i've already mentioned, called android, with lots andlots of developer interest. the first and most importantprinciple is there's more smart people elsewhere thanthere are here and we want all
of them building on topof this web platform. that's why the web platformbecome such an important foundation for the nextgeneration of internet services, web services,and all the things i've talked about. so to finish up, and i hope i'vedone this not too long, because obviously we are proudof where we are, the opportunity before us isof the whole world. some statistics are that theinternet is growing in the
united states, is growing fasterin europe, it's growing even faster in asia, it'sgrowing even faster in developing countries. so all of a sudden, here we are,we're very proud of what we've done, and the way we gotthis thing kick started. but this is a globalphenomenon. and those people, simplerule, they want the same things that we. want they want peace, education,food, safety,
entertainment, knowledge,achievement, and excitement. and the internet as it spreadsgives us an opportunity to really touch the whole world. make it safer, make itbetter educated. really bring people who've neverhad a voice, never had information-- my best example is my friendis a computer science professor at kenya, and kenyasaid, we love google for computer science.
i said of course you lovegoogle, i love google too. he said no we use google toteach computer science. why? we don't have any textbooks. this is a phd program. this gives you a sense of howprofound the arrival of the internet and the power ofinformation, which we hope we can bring it, really doeshave an opportunity to affect the world.
in some really, reallyfundamental ways. so with that, thankyou very much. [claping] david i think we're going tohave larry, sergey, myself. you guys just join us. and i think we're justgoing to have q&a from the floor right? david drummond: q&afrom the floor. come on guys.
i'll sit on the end here. eric schmidt: and if you-- i know you have your handraised, would you mind standing at the microphonemadam so that everyone can hear you. let's have the lady go first. may phong: my name is may phong,i'm a shareholder. both doubleclick and youtubeare terrific acquisitions for you.
i was just wondering how long itwould take to monetize them in a way that wouldadd significantly to the bottom line. sergey brin: it's probablyworth mentioning that certainly doubleclick as aprofitable business on its own as is youtube, depending onexactly what you account for, we've been very, very fortunatewith our core business that it's had so muchrevenue and tens of billions of dollars, that it's hard,even for the substantial
acquisitions, to be ahuge portion of that right off the bat. nevertheless, both doubleclickand youtube have a tremendous amount of display inventory. in youtube's case that's ourinventory and in doubleclick's case that we serve and canimprove both the advertiser and a publisher experience on. so i think they both havepotential but i think for it to be a sizable part of ourrevenue, you're going to have
to wait at leasta couple years. eric schmidt: yes sir. tony mezzapelle: tonymezzapelle, shareholder. i'd like to ask about theinternational sales. only 1/3 of our revenue comesfrom countries other than the us and uk, but according to aslide i saw on the intel site, which happens to be by paulotellini, says that 80% of all internet users in the worldcome from countries other than those two.
and that includes about500,000,000 users that are in the rich countries. so what is the bottleneck thegrowing international sales? are we having problemslocalizing our products fast enough or are we having problemsgrowing our local sales groups? eric schmidt: a simple answeris we're not having problems in that area. i agree with the numbers thatyou gave, which paul i assume
are roughly correct for yourview of the global structure. the difference of course,is monitization. because the advertising marketsin those countries are not as mature, the adrates, and so forth. so you take the product ofinternet penetration and the development of the internetadvertising model in may of those country's, internetadvertising is also held up because of lack of creditcards, debit cards, and overnight email, andtransportation options.
the average growthrate outside the united states is higher. as i mentioned last quarter nonon-us is now larger than us has a total revenue and weexpect that gap will continue to increase. we don't know how much larger itwill be, but i could guess at least 65/35 maybe evenhigher, eventually. yes, sir. jack easterling: my name is jackeasterling and i have a
couple shares also. i understand that you say thatyou're going to be bringing in 6.5 more shares, isthat correct? that you were going to bebring to the market. what i want-- david drummond: optionplan, 6.5 million. eric schmidt: go ahead david. david drummond: you're correct,6.5 million shares of the stock option plan.
jack easterling: so my questionis, the two young men that are sitting there, willyou please not split the stock, just keep it together. larry page: you're asking thatwe don't split the stock. jack easterling:that's correct. eric schmidt: i think that's thefirst time we've had that request. sergey brin: we've had notrouble honoring that thus far and i don't expect thatanything will
change in that respect. we certainly appreciateyour support. jack easterling: alright,thank you. eric schmidt: thank you. yes sir, our goodfriend richard. richard brandt: richard brandti'm a writter, and a minuscule google shareholder. i was just wondering if sergeywould be willing to tell us why he decided to abstain onthe censorship proposals.
sergey brin: yeah sure. primarily i agreed with thespirit of both of those proposals in their concern forhuman rights and specifically human rights in china, freedomof expression, and the freedom to receive information. i should say at the outset thati'm pretty proud of what we've been able to accomplishin china. google, has the gentleman whospoke earlier mentioned, has a far superior track record in mymind than other internet or
internet search companies doin china with respect to making informationfreely available. having very strict policiescompared to the opportunities-- compared to the governmentforces that are in that country. when we entered china, anddeveloped google.cn, which by the way was far later than anyothers major search engine had entered, and primarily was dueto the reservations that the
restrictions that we wouldhave to live by were not consistent with our policies. but we were able to have animplementation, i think, that honored many of ourprinciples. and in fact, most of theprincipals that were in shareholder proposalnumber four. we restricted the amount ofsearch results that may have been omitted, in every case wenotified users that there's information missing because ofyour government policies.
as we do also in theus, germany, and france, by the way. and tried an overall greatertransparency to the process. it was still a tough call,but what we've seen as a consequence is in fact morechinese getting more access to more information. not only that, but now we'veseen the local chinese competitors, the principal onebeing baidu, whose market leader in that market, hasadopted some of our policies.
so now baidu when they omitinformation because there's some government requestregarding it, they now also label that there's someinformation missing. so despite our mixed feelingsabout that market entry, i think that the end resultwe've generated has been very positive. and in fact much of theattention, the shareholder proposals, many congressionalbills, and what not, did arise from the publicity surroundingthat entry.
now from where we are today,i think direction the two proposals were correct. i think that we do by the wayhave an internal set of principles by whichwe operate. and i don't know if it's-- i believe it should be sortof shareholder proposal-- there are several inthere that i don't entirely agree with. i think don't make sense.
for example, our recent launchesof bbs type services, we decided instead of havingpersonally identifiable information that could beforced from us in that country, we would actually makeall information public. so when you make a post, youknow that it's going to be identified as this is such andsuch making this post. we don't have any privateinformation on those services. and that's because we didn'tfeel we could launch service which would have privateinformation in a way that we
felt we could safeguardit from the government in that country. these kinds of, i think, novelapproaches have enabled us to bring more informationto the country. again, with respectto the board proposal on human rights. i think human rightsis very important. i think there are other socialresponsibility issues that we also need to think about.
for example our energy usage,carbon neutrality, for an having great environment forother companies to operate in, and so forth. i think there's a broaderscope there. and i think it might make senseto have a separate-- you know these people are allvery busy and so might be interested in these issuesand might be experts, and some may not be. i think there is certainly roomfor us to have a group of
independent people within googlewho meet regularly to discuss these questions. but i didn't strictly supportthe proposals as they were written and that's why i decidedi would have abstain. eric schmidt: and wewelcome the debate. these are complex issuesthat are important for everyone in the world. and we understand that peoplecan disagree on this and we welcome-- we literally welcomethe discussion.
yes sir. andy moore: hi, my nameis andy moore. i'm a stockholder and i recentlygot into podcasting. i'm launching a new podcastnext month, andy'streasuretrove.com. and i don't see any servicesat google related to podcasting, and maybe i missedit, but you've got youtube, but nothing in the audio realmaside from commercial music. anything in the works regardingpodcasting?
sergey brin: we've undertakena broader infrastructure initiative that enables us tohandle data of any type. we don't want to have to buildspecialized product that's just for podcasts, another onethat's just for videos. and like many of the things thatwe've built thus far, we feel that we are now at a scaleand understanding that we can build more genericservices. we have some more generic thingsout there, probably not perfect for podcasts,as of yet.
for example, googlesites enablesyou to host content of any type because you canhave essentially file storage on their. but we have even moreappropriate more generic technologies that we'redeveloping and i hope you'll be able to see in the nextfew months, six months, something like that. andy moore: thank you. mark jacobs: good afternoon.
can you hear me? eric schmidt: yes. mark jacobs: i'm mark jacobs,i'm a patent trademark lawyer from sacramento andi'm a shareholder. i've had several clientscomplain to me that when they've done google searches fortheir trademark, somebody else's listing comes up first.in fact i have specifically written to google about thisissue and all i get back is a very nice form letter fromsomebody who's very, very low
capacity underneaththe ground. and i wondered if google isgoing to take more effort to control trademark misusageon the searches. larry page: so this has been anissue we've spent quite a bit of time on. and it's an important issue. and while we work really hard toprotect people's trademarks and so on, there's also userbenefit to get competitive advertising.
so for example, if you'rethinking about buying a product actually seeingcompetitive products can be really useful to you. mark jacobs: it's not the issuewhen you put in your trademark and somebodyelse's name comes up. it's misleading, it's creatingconfusion, it is not advertising beneficialto the user. they're looking to get afrigidaire, and up comes whirlpool, using a frigidairetrademark.
david drummond: well actually,we actually litigated this very matter. because we think, as larry said,we think it's a really important issue for users tohave competitive advertising. as it turns out, when you dothe survey you actually see what happens with users,they're not confused. so to take the example that youbrought up, frigidaire, whirlpool if you typed infrigidaire and whirlpool ad came up on the side of thesearch results, guess what the
number one search result,i can guarantee you, for frigidaire wouldbe frigidaire. and so-- mark jacobs: notso, not so, i'm sorry, that is not correct. david drummond: we've gonethrough the court, and as you know, we litigated thismatter against-- in the gieco matter. and of course the court held inour favor for that, which i
think was the right result. mark jacobs: the advertising,i have no problem with. but i could give you a specific examples after the meeting. eric schmidt: ok sir, you'rebeing shown a result there, take a look at it. mark jacobs: i don'tneed a result. eric schmidt: no,nojust take a look. mark jacobs: that's fine, buti can show you several.
but i won't belaborthe point now. eric schmidt: there may be someconfusion on your part between the differencein the results from google and the ads. mark jacobs: correct it'sthe results, is what i'm complaining about. eric schmidt: ok solet's just review for everybody's benefit. we have a policy which weenforce globally, and
thoroughly, that the actualgoogle results are not affected by advertising. so important to understand. we thought you were asking aboutthe ads, the things on the right hand side. so we misunderstood you. the things in the right handside, it is in fact possible for advertisers to fightover key words. and as david said, we in factlitigated that, and we're very
happy to be won that case. but the core results, the onesabout how google answers, in fact answer in our best abilitywhat we think the user was looking for, and is notaffected by advertising. mark jacobs: i appreciatethat. but why can't an attorney orsomebody complains that when you go in the search results, oryou type in frigidaire and you're looking for informationfrigidaire that the first hit that comes up is a differentcompany other than the true
trademark holder. that is my problem. johnathan rosenberg: i cansee the first result. it's here, i don't know ifi can project it there. but the first result iswww.fridgidarie.com. mark jacobs: well i can give youhalf a dozen others but i don't want to belaborthe meeting. eric schmidt: i understandso thank you-- this is jonathan who runs allof our products it actually
matters that he get theright answer here. so thank you johnathan. but again, to the best thatour computers can do, they give the first resultbased on the query. if you are aware of errors ingoogle search results, there are relatively fewof that type. but they're certainly notinspired by google. and remember that the actualsearch index answers are not done by humans.
there are no people typingthose things in. so we don't have a way whereyou can go change them by human intervention. why don't we moveon, thank you. audience: [? george bayon, ?] [? bayon ?] capital partners, privateequity and shareholder. has microsoft or any otherprivate equity contact google about buying their class bshares, and if so, where with
the board of directorsvalue the shares at? eric schmidt: david whydon't you explain-- there is confusion here, overthe value of class b, which don't trade separately. you want to talk abouthow that works. david drummond: whichare class b-- our structure is classb or the private-- george bayond: it's not thestructure, it's just has anyone approached google about--the board of directors
about buying theclass b shares? sergey brin: we should probablyclarify, it's not possible to transfer classb shares and have them-- they would convert thento class a shares. david drummond: class b sharesare only held by shareholders before the ipo butany attempt to-- if you transfer them or triedto sell your shares they can become class a shares. eric schmidt: so thescenario you're
describing it was not possible. david drummond: itwouldn't happen. george bayond: i was wonderingif there was a value put on them or not. eric schmidt: the answer is,it's the same value as class a because there's no separatemarket for class b and they trade one to one. george bayond: thank you. joe holmes: hi my is joe holmes,i'm a shareholder.
i can understand policypotentially not to comment on speculation, but i was justwondering if, hypothetically speaking, two of our competitorsin the search space wanted to join forces? eric schmidt: were youof two i can think of a different set? joe holmes: purely hypotheticalsituation. eric schmidt: ok perhapssomething that was very current, as of a week ago.
joe holmes: i was wondering ifyou could provide some color as to how our business riskwould evolve and what our responses to thoserisk might be. eric schmidt: well, we didhave a test case of this, which was the yahoo microsoftproposed merger. and we took a position thatit was bad for consumers. david wrote a blog post whichi would refer you to. i think it's very well arguedthat the combination would have resulted in too much poweraround electronic mail,
instant messaging, very, veryhigh market shares. and given the history ofmicrosoft it would have been possible that could be misused,as rough sum. i'm probably not doing justiceto your argument david. so obviously it's good thatthat's not going to happen, at least at the moment notgoing to happen. next, yes sir. doug mckenzie: hi i'm dougmckenzie, a shareholder. thank you for yourgreat company.
and i like to also thank you forgetting out of the medium a bit more, eric. with you on cnbc and especiallylarry your interview in fortune magazinewith [unintelligible] germination about howto change the world, really excellent. i wondered if you had consideredinteractive, like video game type interactive,advertising as a way to monetize youtube?
for example, a customer or usergets in there and they start looking at somethingthat's interesting to them and then they might play with it. and it could be, for theobvious, would be an advertisement fora video game. but you could be driving a car,or looking at a house, or doing a variety of other things,where the information flow could be two way. sergey brin: yeah, well i shouldfirst mention we've
also looked at just advertisingwithin video games, which is an emergingmarket and one which we're participating in. within youtube itself, i think,you could certainly use one of our gadget ads, the newgadget ads formats which could have embedded withinit a game. i think that's an interestingapproach. and it could work evenbeyond youtube. i guess you know thatthe youtube
viewer has flash installed. so that will give you greaterconfidence that they be able to see the ad. so it's a good user for that. but it might apply evenmore broadly. doug mckenzie: thank you. daniel goldsmith: my name isdaniel goldsmith and i want to speak about my experience withthe investor relations department.
i don't think theyrelate well to investors or at least myself. there's no phone number todirect queries to so email is the way to go and my emailsnever get answered. eric schmidt: ok daniel goldsmith: i'm willingto help you, we if you need some help. eric schmidt: thank youfor that feedback. since they're here, maybeafterwards we could get the
specifics and on top of it. and i apologize on behalfof the company for that. george davis: hi my name isgeorge davis, i own five google stocks. i go to school over thehill in uc santa cruz. got a little anecdote relatedto the cloud that you're talking about earlier. in january or so, i think,maybe, around there, my house, me and three roommates, we ranout of ink in our printer, and
we can't agree on whose turnit is to buy new ink. so what we do is we write ourpapers in microsoft word, gmail them to our ucsu account,and use the printers the university of californiaprovides us. but there's a problemwith this. the problem is we're usingmicrosoft word to write our papers, so my question is, bythe time i graduate, which will be hopefully fingerscrossed, two years, will google docs be as powerfulas microsoft word?
eric schmidt: sergeyand larry. sergey brin: i think in a numberof respects google docs is more powerful than microsoftword today. for example, the ability formultiple people to edit the same document at the same timeand see the changes coming in, in real time. the ability to access thedocument no matter where you are, whether an internetcafe and whatnot. there's certainly a long listof sort of bullet point
features that's in microsoftoffice, some of which i think will be incorporated, andperhaps even succeeded, like succeeded, in google docsand spreadsheets in the forthcoming years. and there might be some featureswhich are perhaps a little too niche or best left tothird parties to implement. maybe specialized bibliographicentries, you know there's-- those pull downs have hundredsof entries, i don't think we
want to do duplicateevery single one. but the general directionis to be more powerful. larry page: i don't read thingsin microsoft word. peter curbie: yes my nameis peter curbie, i'm a shareholder. my question to you is aboutalternate revenue streams. i don't dispute the fact that youhave a great business and a search and would includedoubleclick in that. but i gather from your lastquarter that you now have a
revenue coming in fromprint advertisements. and i was wondering what othernew revenue streams are you opening up and could youinclude any word on android in that. eric schmidt: well remember,we have print, television, radio, youtube, displayall coming. and you also want tomention enterprise. sergey brin: enterprise has beenan important part, as a fraction still small, but stillimportant part of our
revenue for number of years. and since the recent release ofgoogle apps for your domain also for universities andwhatnot, we really see that as an important growtharea for us. and a lot of companies,including our own, because we're going to use our ownstuff, have really benefited because they can really easilyand cheaply deployed email productivity software toall there employees. peter curbie: how do you makemoney from that exactly?
sergey brin: so there's the freeversion, which many, many people use. and then there's a premiumversion, and typically large companies want support, want toincrease storage, and a few administration features, on somemore things like that, they subscribe to thepremium version. which is $50 a user a year. typical, there are a few otherways that we price to. peter curbie: you didn'tanswering my question about
android, do you haveany word there? eric schmidt: do you want tosay anything about android? sergey brin: android is part ofour broader goals to enable more internet access viamore devices, more quickly, and easily. the goal is not the revenuestream itself, but rather by increased usage of the internetvia mobile devices we think we will benefit. eric schmidt: and therevenue might be an
issue, since it's free. android sergey brin: yes, ishould clarify. the android-- we will be open source and freethe available to all. audience: yes, if you can getadvertising into video games, maybe you could get grand theftauto to carry lojack ads and ceradyne, the bulletproof vest company. but i wanted to ask anotherquestion, would you tell us
about the wedding? eric schmidt: which one? there were-- audience: both, all. eric schmidt: larryand sergey. sergey brin: i think we preferto focus on the business in this meeting. but we think those are prettygood ideas for ads within grand theft auto.
eric schmidt: larry? larry page: whateversergey said. david drummond: ok, yes sir. audience: yes, hi, my name isrea, i'm a shareholder. and for first of all, i wantto comment google on such a great company and greatapplications. i use google for almosteverything. i just start my own blog sitelast week, and i'm ready for an android based phone whenit comes out too.
but my question is more of astatement of concern about some of these world issues againgoing on these days. sergey i loved your commentsabout what google is trying to do to make information moreavailable in some of these countries that do do censorship,also providing your functionality. but i'm also concerned thatbecause of your great success google is probably the mostpowerful tool in the world right now, and it can doa lot of great things.
i hope we're all using it todo a lot of great things ourselves and to helpother people too. but i'm also concerned aboutthese other governments of other large countries that havedifferent values from us, that to try to censor andcontrol information in ways against our values here, you'restill trying to grow and some of theseother places. i'm just concerned if you couldfind a way to become number one and make a lotof money there but under
different negotiations that youmight need to go through to modify your software tohave certain restrictions under the request ofthe governments. would you do that or what wouldyou do, how would you get around that? sergey brin: that'sa good question. i should clarify our primarygoal in these countries, for example china, is not by anymeans to generate as much revenue as possible.
in fact, while china's financialperformance has been strong and good it's stillnot material as a fraction of our revenue. we could abandon it tomorrowand would not have material effect on our revenues. our goal has really been, what'sthe most positive we can do, and thus far we feltthat by staying in the market and being revolutionarywithin it, that we can do the most good.
and that's how we apply andit's not just china. we get blocked especiallyyoutube, in many countries around the world,all the time. youtube got blocked in thailandbecause there were videos with people's feetpictured above the king. now we could take an extremeposition saying we will not allow any video to go down andif they don't accept that one they don't get youtube at all. but on balance, we feel we bringmore to the thai people
even if we have to take down thevideo of the feet over the king, by providingyoutube there. and that's not alwaysthe case. in some cases maybe we feelthat we're asked to do something that's reallybeyond our principles. and in each case, it'sa judgment case. that's the strategy i think wewill continue to employ. eric schmidt: we've alreadyrun over a time. so we got three more questions,i'd like to get
those questions, question,answer, question, answer as quickly as we can. audience: yes, thank you.my name is robert [unintelligible], i'm withamnesty international i'm representing the new york citypension funds with over 720,000 shares. i just want to follow on thechina questions, and i recognize you've struggledwith this. and we've been in dialoguewith you for
about 18 months now. and all i have to say is wedo appreciate that it's difficult, but you reallyhaven't come far enough. and we really do need to domore and actually make a greater effort. and i have two specificquestions. the first is why won't yousupport the global online freedom act? which is proposed federallegislation which actually
would help you deal with thechinese on this issue? and second since the chineseconstitution actually guarantees freedom of speech,why aren't you actually engaged, working in the chineselegal system, to deal with these issues. eric schmidt: david. david drummond: on your first,point i don't think it's quite accurate to say thatwe we're-- actually i don't think it'sreally accurate all to say
were not supporting the globalonline freedom act. we actually support theprinciples there, we'd like to see legislation that addressesthe problem and make sense. i think there's a hearing comingup in a couple weeks in the senate where you'llhear our views in a more fulsome way. but we don't actually opposethat, and we'd like to see legislation that makes sense. on the chinese legal question,i think it's
an interesting one. it's not clear to us that wehave the ability, as google to do that, but i think it's aninteresting idea for us to utilize the chinese legal-- orhelp those who are using the chinese legal system, to try toensure those rights and i think it's something we oughtto think about doing. eric schmidt: richard. richard brandt: on advertising,eric you mentioned print, tv, radio adscoming up, that sort of thing,
i've never understoodgoogle strength in moving essentially offline. your strength is relevancy,relating this to what people are doing, are interested in. somebody reading a newspaper, orpassing by a billboard, or watching television, youhave no idea what their interests are. eric schmidt: well actually,we hope to do better than that.
that would be the base case, andwe think with technology improvements so we can actually,at least do a pretty good job compared to what'sbeing done today in offline. the best example is, i'm sureyou have a television at home, you probably have a set topbox, that set top box is a computer, and now thatset top boxes are connected to the internet. with appropriate softwarechanges, technology work, built by google and others,can actually cause more
relevant television to showup on your television. it's a small victory, buta very fundamental one. television industry is amassive and very mature advertising industry, if we canshow more relevant ads, we can fundamentally enter as a newplayer and really provide a better television experiencefrom an advertising perspective. richard brandt: i think littleas an old print guy, it that really confuses me.
david drummond: print is harderbecause we don't have a set top box to play with. but even there, we did an adinterchange with all the major newspapers and publishers werewe actually have tried to get much better distributionfor ads. so that's again a case we'retrying to help them because we need them, and in particularwe need their content. and sir you have the honorof the last question. audience: thank you very much.
my name is rudolph[unintelligible] i am a stockholder. i read most recently googlewas interested in the environment and i was wonderingif you give us stockholders what yourprojections are and how you can help the environment. larry page: well yeah, we areabsolutely very, very interested in the environment. we feel that we have asignificant responsibility due
to our data centers, whichuse a lot of energy. and so we have very smart peoplewho are building those. and as part of those buildswe're trying to do environmental things as we buildthe data centers to make sure that they're using reallygreen energy and so on. we also think there's a hugeopportunity to reduce the power of green electricity tomake it competitive with coal. and we've made investmentsin different areas, solar thermal, for example.
and we're also hiring people,small numbers of people, to work on very exciting and veryinteresting projects to really significantly reduce the costof some of those green technologies. audience: one of the mostimportant things, that i think that google should be targetingis natural sources of energy in order to alleviate are problems worldwide. larry page: we're basicallylooking at
the sun and the earth. the heat in the earth,geothermal power. and we're very optimistic thatthe cost of those things can be competitive with howwe generate power now. audience: very importantthank you. david drummond: and we agree. i want to thank everybodyspending their afternoon here. we will see this year. thanks again.
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